March 26 (Bloomberg) -- The Philippine peso fell to its
weakest level this year on speculation the central bank will
implement more measures to curb capital inflows. Seven-year
government bonds advanced.

Bangko Sentral ng Pilipinas will soon discuss a plan to
stop foreign funds from placing money in its reverse-repurchase
facility, Assistant Governor Cyd Amador said March 21. The
monetary authority banned overseas investors from its special
deposit accounts in July and cut the rate offered on the
facilities twice this year. The BSP will monitor overseas
borrowings of Philippine companies as it encourages greater
utilization of domestic funds, Deputy Governor Diwa Guinigundo
told reporters March 22.

“The market is waiting for clearer direction, especially
when you have the central bank signaling that it could unveil
more measures,” said Ricky Cebrero, head of treasury at
Philippine National Bank in Manila. “The trend is still for the
peso to appreciate in the long term, given the economic
fundamentals.”

The peso fell 0.6 percent to 41.07 per dollar at the close
in Manila, the lowest level since Dec. 28, according to Tullett
Prebon Plc. It may retreat to 41.20 “in the near term,”
Cebrero said. One-month implied volatility, a measure of
expected moves in the exchange rate used to price options, rose
three basis points to 3.6 percent.

SDA Rate

The $225 billion economy grew 6.6 percent in 2012, the
fastest pace in Asia after China. Growth may be 6 percent to 7
percent this quarter, Economic Planning Secretary Arsenio
Balisacan said yesterday.

“The use of the SDA rate hasn’t been fully exploited or
maximized, so we will be reviewing the situation on a continuing
basis,” Tetangco told Bloomberg Television on March 15, a day
after he cut the SDA rate to 2.5 percent from 3 percent and set
a unified rate of 3.5 percent for all tenors in the reverse-repurchase window.

The yield on the 7.75 percent bond due February 2020 fell
five basis points, or 0.05 percentage point, to 3.31 percent,
according to midday fixing prices at Philippine Dealing &
Exchange Corp.

There were 1.93 trillion pesos ($47 billion) in the central
bank’s special deposit accounts and 280.9 billion pesos of
reverse repurchases outstanding as of March 8, latest data show.

Financial markets will be shut on March 28 and 29 for the
Easter holiday.